STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALL KINDS OF BLINDS, )

)

Petitioner, )

)

vs. ) Case No. 99-4476

)

DEPARTMENT OF LABOR AND ) EMPLOYMENT SECURITY, MINORITY ) BUSINESS ADVOCACY AND )

ASSISTANCE OFFICE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case by video teleconference on March 22, 2000, with the parties appearing from West Palm Beach, Florida, before J. D. Parrish, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Angela Conroy, President

All Kinds of Blinds

123 North Congress Avenue Suite 328

Boynton Beach, Florida 33426

For Respondent: Joseph L. Shields, Senior Attorney

Department of Labor and Employment Security

2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189

STATEMENT OF THE ISSUES

Whether the Petitioner should be certified as a minority business enterprise (MBE) by the Minority Business Advocacy and Assistance Office of the Department of Labor and Employment Security (Department).

PRELIMINARY STATEMENT

On September 24, 1999, the Department issued a letter to the Petitioner, All Kinds of Blinds, that denied a request for certification as a MBE. The denial was based upon findings that the company did not meet the specifications of Section 288.703(2), Florida Statutes. More specifically, the denial alleged that the applicant was not independently owned and/or operated since the minority owner did not control the management and daily operations of the business. The Petitioner timely requested an administrative review of the denial and the matter was forwarded to the Division of Administrative Hearings for formal proceedings on October 22, 1999.

At the hearing the Petitioner presented testimony from Angela Conroy and Phillip Conroy. Hector DeLao, a certification and compliance officer employed by the Department testified on behalf of the Respondent. The Respondent’s Exhibits numbered 1 through 8 were admitted into evidence. A Transcript of the proceedings has not been filed. The Respondent’s Proposed

Recommended Order was filed on April 3, 2000. It has been reviewed in the preparation of this order.

FINDINGS OF FACT

1. The Petitioner, All Kinds of Blinds, was incorporated in the State of Florida on January 15, 1999, as All Kinds of Blinds of So. Fla., Inc.

2. The President of the Petitioner is Angela Conroy, a female. Mrs. Conroy owns 51 percent of the company.

3. The remaining 49 percent of the company is owned by Phillip Conroy, Angela’s husband. Mr. Conroy also serves as the company’s vice president and secretary.

4. On June 2, 1999, Mrs. Conroy executed a Florida Statewide and Inter-local Minority Business Enterprise Certification Application that was filed with the Department. The application identified Angela Conroy as the person who makes policy, financial decisions, signs payroll, signs surety bonds and insurance, and makes contractual decisions for the Petitioner. The application also identified Phillip Conroy as the person who makes personnel decisions and signs payroll for the Petitioner. Mr. Conroy is authorized to sign checks on behalf of the company.

5. According to the application, the Petitioner performs various functions regarding the sales, consultation, service, and installation of all types of window coverings.

6. Mrs. Conroy sought MBE certification as an American woman with majority ownership of the Petitioner.

7. Mrs. Conroy has ten years of experience in this type of business but was reluctant to let her former employer know that she was opening her own business. Accordingly, Mrs. Conroy authorized Mr. Conroy to execute applications and various papers on behalf of the Petitioner. She relied on his business experience to guide her through the start-up process. An initial loan in the amount of $4,000 from the couple’s joint bank account was the start-up funds for the Petitioner.

8. Mr. Conroy does the installations for the Petitioner.

   
   

   He performs other functions for the company as may be necessary. He also owns and operates an air conditioning filter company that leased a vehicle also used for the Petitioner’s business.

   Mr. Conroy maintained that his name appears on records pertaining to the Petitioner as a convenience for his wife.

9. Mr. Conroy is a white male.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

11. In this matter the Petitioner has the burden of proof to establish it meets the criteria for MBE certification. It has failed to meet that burden.

12. Section 288.703(2), Florida Statutes, provides:

    
    

    (2) "Minority business enterprise" means any small business concern as defined in subsection (1) which is organized to engage in commercial transactions, which is domiciled in Florida, and which is at least 51-percent-owned by minority persons who are members of an insular group that is of a particular racial, ethnic, or gender makeup or national origin, which has been subjected historically to disparate treatment due to identification in and with that group resulting in an underrepresentation of commercial enterprises under the group's control, and whose management and daily operations are controlled by such persons.

    A minority business enterprise may primarily involve the practice of a profession.

    Ownership by a minority person does not include ownership which is the result of a transfer from a nonminority person to a minority person within a related immediate family group if the combined total net asset value of all members of such family group exceeds $1 million. For purposes of this subsection, the term "related immediate family group" means one or more children under 16 years of age and a parent of such children or the spouse of such parent residing in the same house or living unit.

    
    

13. Rule 38A-20.005(3), Florida Administrative Code, provides:

    1. An applicant must establish that the minority owners possess the authority to control and exercise dominant control over the management and daily operations of the business.

       1. The discretion of the minority owners shall not be subject to any formal or informal restrictions (including, but not limited to, by-law provisions, purchase agreements, employment agreements, partnership agreements, trust agreements or

          voting rights, whether cumulative or otherwise), which would vary or usurp managerial discretion customary in the industry.

       2. If the applicant business is a corporation and the business affairs of the corporation are managed under the direction of a board of directors as provided by the articles of incorporation or bylaws of the corporation or Section 607.0824, Florida Statutes, the articles of incorporation or bylaws must explicitly clarify the number of the board of directors for establishing a quorum, or it will be deemed by this office that a quorum of the board of directors consists of a majority of the number of directors presented by the articles of incorporation or the bylaws.

       3. The minority owners must exercise sufficient management and technical responsibilities and capabilities to maintain control of the business. If the owners of the business who are not minority persons are disproportionately responsible for the operations of the business, then the business is not controlled by minority owners.

       4. The control exercised by the minority owners shall be real, substantial and continuing. In instances where the applicant business is found to be a family- operated business, with duties, responsibilities and decision-making occurring either jointly and mutually among owners and principals, or severally along managerial and operational lines between minority owners and non-minority owners or principals, the minority owners shall not be considered as controlling the business. Where the minority owners substantiate that the assumption of duties is not based on their lack of knowledge or capability to independently make decisions regarding the business' management and day-to-day operations, but on their execution of delegation of duties the minority owners' demonstration of control may not be

          affected. The minority owners shall establish that they have dominant responsibility for the management and daily operations of the business as follows:

          1. The minority owners shall control the purchase of goods, equipment, business inventory and services needed in the day-to- day operation of the business. The minority owners' control of purchasing shall be evidence of their knowledge of products, brands, manufacturers, types of equipment and products and their uses, etc., rather than merely reflective of the minority owners' ministerial execution of the ordering/acquisition of goods.

          2. The minority owners shall control the hiring, firing and supervision of all employees, and the setting of employment policies, wages, benefits and other employment conditions. In instances where minority owners have delegated the hiring and firing of employees, the minority owners shall demonstrate that their knowledge and capability is sufficient to evaluate the employees' performance in the given industry.

          3. The minority owners shall have knowledge and control of all financial affairs of the business. The ability of any non-minority owner or employee to sign checks and enter into financial transactions on behalf of the business shall be considered in determining financial control. The minority owners shall expressly control the investments, loans to/from stockholders, bonding, payment of general business loans, payroll, and establishment of lines of credit.

          4. The minority owners shall have managerial capability, knowledge, training, education and experience required to make decisions regarding the operations of the business. In determining the applicant business' eligibility, the Office will review the prior employment and educational backgrounds of the minority owners, the professional skills, training and/or

             licenses required for the given industry, the previous and existing managerial relationship between and among all owners, especially those who are familially related, and the timing and purpose of management changes. If the minority owners have delegated management and technical responsibility to others, the minority owners must substantiate that they have caused the direction of the management and the technical responsibilities of the business. When the applicant business provides services which require that the business and/or its professional qualifier be licensed, the minority owner shall hold the requisite license issued by the State of Florida or local licensing entity. The minority license holder need not be the controlling owner of the business, but must hold an ownership interest.

          5. The minority owners shall display independence and initiative in seeking and negotiating contracts, accepting and rejecting bids and in conducting all major aspects of the business in regard to any and all bidding and contracting. In instances where the minority owners do not directly seek or negotiate contracts, prepare estimates, or coordinate with contracting officials, but claim to approve or reject bids and contractual agreements, the minority owners shall demonstrate that they have the knowledge and expertise to independently make contractual decisions.

          6. The minority owners shall substantiate personal direction and actual involvement with all major aspects of the applicant business. The major aspects shall be defined as those tasks essential to accomplish all objectives and operations related to those services or commodities for which the applicant business requests certification.

          
          

14. Rules governing MBE certification require the minority owner to possess authority and exercise dominant control over

the management and daily operations of the business. In this case, the start-up activities, the investment capital, and the operation of the company demonstrate that this venture is a family-operated business. Inasmuch as Mrs. Conroy has not demonstrated control over the business for a two-year period (See Rule 38A-20.005(2), Florida Administrative Code), the Petitioner cannot qualify as a MBE.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Labor and Employment Security, Minority Business Advocacy and Assistance Office, enter a final order denying the Petitioner’s application for MBE certification.

DONE AND ENTERED this 28th day of April, 2000, in Tallahassee, Leon County, Florida.

J. D. PARRISH Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 2000.

COPIES FURNISHED:

Angela Conroy

All Kinds of Blinds

123 North Congress Avenue Suite 328

Boynton Beach, Florida 33426

Joseph L. Shields, Senior Attorney Department of Labor and

Employment Security

2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189

Mary Hooks, Secretary Department of Labor and

Employment Security

2012 Capital Circle, Southeast Suite 301, Hartman Building Tallahassee, Florida 32399-2189

Sherri Wilkes-Cape, General Counsel Department of Labor and

Employment Security

2012 Capital Circle, Southeast Suite 307, Hartman Building Tallahassee, Florida 32399-2189

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 99-004476

Orders for Case No: 99-004476